EAP termination was used in the past when you could not load a server certificate on a radius server. If you already have a radius server and you can load a server certificate on it, you should not enable termination; you should just define a radius server on the controller and have your radius server authenticate to it. Enabling termination on the controller has a few drawbacks like having to load a server certificate on the controller and the inability to do machine authentication for Windows clients.
To answer your question: you should configure the EAP type on the authentication server. Again, if you can put a server certificate on your radius server, you should not need to enable termination on the controller.